31 Aug

Merge Discloses Accounting Errors and Irregularities

Merge Technologies Inc. disclosed in its 2005 financial statement filings with the SEC that company executives had bypassed [tag]internal controls[/tag] over the accounting function in order to inappropriately increase revenue and profits since 2002. Correcting these [tag]irregularities[/tag] decreases the company’s profits for those years.

Experts are a bit surprised that the company is admitting to the potentially illegal conduct. The SEC is conducting an informal inquiry into Merge’s accounting practices, and this admission could lead to the SEC elevating it to a formal inquiry.

Merge Technologies does business as Merge Healthcare, and the company develops software for diagnostic imaging centers, manufacturers of medical imaging equipments, and some hospitals.

Problems with the financial statements came to light shortly after a June 2005 purchase of Cedara Software Corp, which more than doubled Merge’s size.

The restated figures are:

2005 – Revenue $82.6 million; Net loss $2.7 million

2004 – Revenue $26.3 million (decrease of over $10 million); Net income $2.2 million (decrease of over $5 million)

2002 through 2003: Revenue decrease of over $6 million; Net income decrease of $3 million

30 Aug

Polygamist and Fugitive Warren Jeffs Apprehended

Warren Jeffs, a known polygamist and fugutive, was caught this week after the Cadillac Escalade in which he was riding was pulled over by the Nevada Highway Patrol.

The trooper who pulled over the vehicle said something didn’t seem right as soon as he approached the vehicle. The FBI arrived on the scene and found 3 wigs, 15 cell phones, letters to “President Warren Jeffs,” $54,000 in cash and $10,000 in gift cards. Read More

29 Aug

Still Nothing Done in the Milwaukee Public Museum Scandal

Back in January of this year, County Board Supervisor James White suggested that the Milwaukee Public Museum be subjected to the scrutiny of a [tag]forensic audit[/tag]. The museum’s coffers had been emptied by incompetent and possibly corrupt employees.

At that time, Assistant District Attorney David Feiss claimed that he was conducting an investigation of his own that would be quickly wrapped up. He said within a month. Here we are, seven months later with no results from him or the Milwaukee District Attorney’s office. Read More

28 Aug

Former Milwaukee police officer Jon Bartlett is going to prison

Former Milwaukee [tag]police officer[/tag] Jon Bartlett has been sentenced to 4 1/2 years in prison following his convictions on [tag]felony[/tag] charges related to [tag]bail jumping[/tag] and threatening to blow up the police station where he used to work.

Judge David Hansher called Bartlett a “menace to society” and followed his prison time with 5 years of [tag]probation[/tag] and a $10,000 fine. Hansher said to Bartlett, “I find you are a ticking time bomb about to explode at any minute.”

Barlett is currently being held by federal officials on charges of trying to buy two firearms, which is prohibited for anyone charged with a felony. He also faces state charges of substanial battery in the Frank Jude Jr. beating case, as there was a hung jury on those charges earlier this year. He also faces potential federal charges in the Jude case.

Jon Bartlett spent 5 years on the Milwaukee police force before being fired on May 24, 2005 for participating in the Frank Jude beating. Eight other off-duty officers were also fired for their part in the Jude case. Bartlett was still receiving his paycheck (even though fired) under state law, and has been paid about $97,000 under this law. That will end as of today, due to his felony conviction.

27 Aug

Civil Settlement with Prudential Financial to be Announced

The United States Department of Justice, the Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange, are expected to announce a civil settlement with Prudential Financial Inc. on Monday. This will settle claims that brokers in the company’s securities unit assisted investors to rapidly trade mutual fund shares (known as market timing).

Five former Prudential Securities brokers and their branch manager in Boston were accused of assisting sophisticated investors to market time trades of mutual funds, with profits over $1.3 billion. Action is taken in cases like this because rapid trading tends to raise expenses and lower profits for long-term shareholders in a fund.

The settlement of about $600 million will be one of the biggest in the broad investigation of market timing, and will help the company avoid criminal prosecution. Prior to the Prudential settlement, total settlements of $3.5 billion were reached in the market timing scandal.

25 Aug

Whistleblowers accuse State Farm Insurance of cheating victims of Hurricane Katrina

ABC News is reporting that [tag]State Farm Insurance[/tag] supervisors demanded that hurricane damage reports be altered so that the company would not have to pay claims.

Kerri Rigsby and Cori Rigsby were [tag]independent adjusters[/tag] working exclusively for State Farm for eight years. They say that they’ve turned over documents to the FBI and Mississippi investigators relative to their claims of [tag]corruption[/tag] within the company.

The sisters say that they saw large scale [tag]fraud[/tag] in the Biloxi and Gulfport field offices, and they believe that a large shredding truck brought in by the company was used to destroy documents related to Hurricane Katrina. The sisters also say that supervisors were pressuring adjusters and consultants to attribute hurricane damage to water, rather than wind, so that claims would not have to be paid. Under the State Farm policies, water damage is not covered, but wind damage is.

State Farm says they have started an [tag]internal investigation[/tag] into the matter.

21 Aug

Northwestern Mutual Wins Case Against Former Agent

In March 2005, Northwestern Mutual filed suit against David Stinnett, a former NML agent in Evansville, Indiana and his company, Policyowner Protection Service Inc. The company claimed that Stinnett and the company started the website www.nmlcomplaints.com in 1999 in order to extort upwards of $100 million from NML.

NML alleged that David Stinnett and his associates started the website in order to attract policyholders to file lawsuits against NML. Stinnett would refer policyholders to attorneys, and in turn he would receive referral fees. Read More

20 Aug

2,996 victims of 9/11

I am participating in a tribute to the victims of 9/11. On September 11, 2006, bloggers will be posting tributes to the 2,996 victims who lost their lives in the tragedy.

The tribute is described by the organizer:

2,996 is a tribute to the victims of 9/11.On September 11, 2006, 2,996 volunteer bloggers will join together for a tribute to the victims of 9/11. Each person will pay tribute to a single victim.

We will honor them by remembering their lives, and not by remembering their murderers.

If you would like to help out, either by pledging to post a tribute on your own blog, or by offering your services to promote this cause, just leave a comment here and I.ll email you the name of a victim.

Then, on 9/11/2006, you will post a tribute to that victim on your blog.

But, and this is critical, the tributes should celebrate the lives of these people.kind of like a wake. Over the last 5 years we.ve heard the names of the killers, and all about the victim.s deaths. This is a chance to learn about and celebrate those who died. Forget the murderers, they don.t deserve to be remembered. But some people who died that day deserve to be remembered.2,996 people.

Thank you,

D.Challener Roe

My tribute will be to John Patrick Tierney, age 27 when he died. When I saw his picture, the first thing I could think of was his parents. I am honored to be able to pay tribute to their son for them.

You can sign up to participate here.

18 Aug

Conspiracy of Fools: Moments Before Enron’s Bankruptcy

As I’ve mentioned several times before, Conspiracy of Fools by Kurt Eichenwald has been a fascinating read. He dug so far into the details of the demise of the company and its executives.

The company was in a downward spiral, and a merger with another energy company, Dynegy, was seen as the only way for the company to survive. Dynegy injected some cash into the company, but immediately thereafter, Dynegy executives started finding out about Enron’s true financial picture. Undisclosed debt and secret related party transactions put the merger in jeopardy.

Finally, Dynegy called off the entire deal. It was clear that Enron’s only option was bankruptcy. Ray Bowen, treasurer of Enron, raced to a telephone.

He had to move fast. Some $400 million was sitting in accounts at Citibank, which would now be owed far more than that in the bankruptcy. The bank might seize the money as its own. Bowen needed to move it. Enron owed basically nothing to Goldman Sachs. That’s where it would go. He dialed the number for Mary Perkins, the assistant treasurer.

“Pull every penny we’ve got out of Citibank and wire it over to Goldman Sachs,” he said. “Do it now.”

McMahon immediately called the ratings agencies to let them know. Standard & Poor’s was the first to downgrade the company. Its debt was now rated at junk levels. Trading in Enron shares was suspended. When it resumed, the price plummeted 75 percent, to just above one dollar.

Computer-support technicians at Enron watched as the commands went through. Millions and millions of dollars were moving out of Enron’s bank accounts. They had no doubt what was going on. Someone was stealing all of Enron’s cash.

One executive made a decision. He had to stop it. He telephoned the first reporter he could think of.

16 Aug

Conspiracy of Fools: Did Skilling Read Before He Signed?

While Enron and Dynegy executives were trying to work out the details of their pending merger, William McLucas, one of Enron’s outside lawyers began questioning Jeff Skilling about the Southampton partnership and LJM. These were two of the several entities that put large amounts of money into the pockets of Enron executives.

Skilling claimed he knew nothing about the fact that Andy Fastow, Enron’s former CFO, received $35 million from LJM in the prior two years. Fastow had told the Enron board of directors that Skilling had approved each deal done by LJM. Skilling denied it.The attorney brought out an approval sheet for an LJM deal named Margaux. The sheet had Skilling’s signature on it.

“You signed this one,” McLucas said. “There is a list of questions with answers, and you signed it.”

“Now, wait a minute,” Skilling shot back. “My signature doesn’t mean I’ve reviewed these questions independently and satisfied myself the answers are right.”

McLucas crossed his arms. “What does it mean, then?”

Skilling pointed at the signature page. “Right here, I saw Causey and Buy already signed,” he said. “The fact that they signed it was good enough for me to sign without reviewing the same facts again.”

So was Skilling just trying to get out of responsibility for that deal, or did he really not examine the terms of the deal before he approved it?